Fortune favours the brave and that is exactly what could be coming to property developer Aspen Group (ASX: APZ) which has purchased the Meadowbrooke Lifestyle Estate under a receivership sale with plans to turn the troubled retirement village around to achieve its commercial potential.
Located in Boyanup, 180km south of Perth and spanning 9.1 hectares, Meadowbrooke has been granted council approvals for the construction of 181 houses but due to financial constraints from the current owners, only 17 have been built to date. The project fell into receivership in 2019 when house prices in the area declined. Subsequently, the average sale price of new houses in the estate is $312,000 but under financial pressure, the last two were sold for $250,000 during the receivership.
Putting their hand up to take over the land lease confident they can turn the project around, Aspen has purchased Meadowbrooke Lifestyle Estate for $3.25 million which they believe is less than 50% of the replacement cost.
Also contained within the property is a large club house, activity centre, bowling green, gymnasium, and parking capacity for caravans and boats.
Full site infrastructure is in place for the next 78 houses to be built with Aspen likely to be the beneficiaries of rebounding house prices and the socio-demographic profile of the Boyanup region where the Estate is 20km north of Bunbury.
According to 2016 Census data, the Bunbury Region boasted a population of 176,330 residents of which 38% were over the age of 50. This was higher than the 32% of WA residents over the age of 50 highlighting the region as a popular retirement destination.
The first steps for Aspen will be to address some legacy issues which included fresh capital injection by offering a small number of new houses at competitive prices as low as $225,000 that will raise the project’s profile with prices to steadily rise from there as the Estate is raised.
Having overcome many of the challenges brought upon by the pandemic where planned communities operated by Aspen were heavily impacted, the Company rebounded impressively in FY21 to deliver $25.4m net profit after tax which represented a 114% increase on the previous year.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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